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February 28, 2008

Health Insurers Address Issue of Nixed Policies in California

The health-insurance industry is racing to defuse a growing furor over retroactive policy cancellations that have saddled some patients with big medical bills and sparked lawsuits.

America's Health Insurance Plans, an industry group, is pushing a proposal with state regulators that would give consumers the right to appeal such policy cancellations, known as rescissions, to an external panel, whose decisions would be binding. Some insurance companies, eager for even quicker action, are preparing to roll out their own independent review programs.

The efforts, which are getting a largely positive reception from consumer groups, are emerging amid public outrage in several states against insurers that have voided policies after the beneficiaries started racking up large claims for cancer or other serious illnesses.

Last week, an arbitration judge in California awarded $9.4 million, mostly in punitive damages, to a hairdresser whose medical coverage was canceled by Health Net Inc. The insurer, which acted while the woman was undergoing treatment for breast cancer, claimed that she had falsified information about her weight and failed to mention a heart murmur. The judge ruled that Health Net's conduct was "reprehensible" and unlawful.

Such cases have cast an unflattering light on insurers' practices of investigating individuals' medical histories after they get sick. The insurers say they have the right to rescind policies when policyholders don't disclose pre-existing medical conditions that would have disqualified them from coverage, or when they misrepresent information on their policy application. The companies say they are protecting the integrity of the underwriting process and keeping insurance coverage affordable for customers.

February 26, 2008

Setting a record for its quarterly giving, Blue Shield of California Foundation (BSCF) today announced the award of $13.1 million in grants to nonprofit organizations and programs to improve the quality of patient care through health technology and to expand health insurance for children who do not qualify for public programs.

Nearly half of the money, $5.75 million, will be used to expand the foundation’s groundbreaking program to dramatically reduce the number of hospital-acquired infections (HAIs). After seeing remarkable success in its nine-hospital pilot project, BSCF will use the grant announced today to expand its innovative California Healthcare-Associated Infection Prevention Initiative (CHAIPI) to at least 100 hospitals.

“Hospital acquired infections put lives at risk and increase consumer costs. We want to dramatically reduce those risks by ensuring hospitals have access to innovative new technologies that help pinpoint and stop the spread of infections,” said Crystal Hayling, president and CEO of BSCF. “Given the results we saw in our test program, we expect the broad expansion of this effort to mean 4,000 fewer patients will contract an HAI in the next year, which translates into 30,000 fewer patient days in the hospital, $60 million in avoided costs to patients and hospitals, and nearly $15 million in bottom-line hospital savings.”

In California, an estimated 150,000 patients suffer from HAIs annually, 9,000 of which result in death. Through CHAIPI, participating hospitals will receive support for new technology and collaborative learning opportunities about best practices. While only not-for-profit hospitals can receive funding, this grant is unique because for-profit hospitals are invited to participate in the collaborative learning sessions and will have the opportunity to purchase the technology at a reduced price.

“We look forward to taking CHAIPI to scale because it has the potential to alleviate untold human suffering and save millions of dollars in unnecessary costs, both for patients and our healthcare system,” Hayling said.

Other health and technology grants announced today include:

* $350,000 to the California Health Foundation and Trust to expand its telemedicine program by increasing the number of telemedicine providers and offering technical assistance to those in the field. Telemedicine is vital in rural, underserved areas.

* $115,000 to the California Society of Thoracic Surgeons to study complications of open heart surgery, and to build a single source of clinical data on which to assess and replicate best practices to improve cardiac surgical outcomes.

* $105,000 to the California Children’s Hospital Association for an initiative to reduce catheter-associated and other infections acquired in neonatal intensive care units.

February 24, 2008

Growing pains for UnitedHealth Group

Organized medicine already has offered its reasons why health plan consolidation is troubling for patients and physicians. In late January, California regulators added 133,000 more reasons to the list.

That is the number of violations of state laws and regulations the California Dept. of Insurance says it discovered in just a one-year period investigating the aftereffects of UnitedHealth Group's $9.2 billion purchase of PacifiCare Health Systems. With more than 1.1 million claims examined, that averages out to one reimbursement and claims handling violation for every nine claims. On top of that, the California Dept. of Managed Care, which regulates HMO operations only, found that in the same 2006-07 period, United-PacifiCare mishandled 30% of claims.

Those numbers paint a stark picture of a plan that grew too big and with too little accountability to the patients and physicians who, in the wake of the merger and the market clout it created, had less choice whether to put up with such shoddy service. (Interestingly, as the California insurance regulators point out, one area in which United skipped the growing pains was in its collection of premiums).

The United-PacifiCare example is a warning to regulators about the dangers of health plan mergers -- some 400 in the past decade, many plagued by their own problems -- and it should make them take a long, hard look before considering approval of any such deal.

The case also shows that regulators need to take the strongest action possible to make plans accountable for their misdeeds. History has shown that colossal health plans don't appear to worry much about the occasional fines that pale in comparison to their profits -- it's merely the cost of doing business.

The California situation may mark a striking departure from that pattern. The state could, assuming all violations are found to meet the more serious standard of "willful," to fine United $1.3 billion. That's 100 times more than the national record of $12.6 million it set in December 2007 in fining Blue Shield of California for improper cancellation of individual policies, a penalty the plan is fighting. So far, the California Dept. of Managed Care has issued a $3.5 million fine to United over just the HMO claims.

February 23, 2008

What Now for California Health Care?

Last month the Senate health committee dumped the Schwarzenegger/Núñez Model ABX1 1, California's trend-setting gadget for health-care repair. Senator Sheila Kuehl, who chairs that committee, tossed it for more personal reasons, other than the obvious $14-billion price tag and state budget deficit of similar size.

Senator Kuehl wants to bring back her own model, SB-840, a government automaton that will fry any remaining individual choice in California health care. Governor Schwarzenegger wisely vetoed this legislation in 2006, but it was reintroduced last year and now lurks in Assembly committee. Governor Schwarzenegger vetoed SB-840 because he knows it would create a government monopoly that would tilt the playing field against individual choice, likely past the point of no return.

Senator Kuehl, ironically, noted that a worrisome aspect of ABX1 1, which aimed for “universal” health care through compulsory purchase of private insurance, was a probable “lack of choice” of doctors and hospitals for patients. But under SB-840, California would implement a Canadian-style, government monopoly, health care system that would simply eliminate patient choice in favor of absolute government control.

In return for, at most, a reduction of four percent of current health spending, Californians would pay a heavy price for SB-840. The price would include a dramatic drop in the number of California physicians, long waiting lists for medical services costing an estimated $1 billion each year, and abuse of "free" health care, costing as much as $9 billion – much more than the amount saved by eliminating “profits.”

February 21, 2008

More Heat for California Insurers Canceling Policies

The running saga over California health insurers canceling policies rolls on. Now, the Los Angeles City Attorney is suing an insurer called Health Net for allegedly rescinding coverage when members submit claims for costly treatments.

The suit, filed yesterday, applies to individual policies. A Health Net spokesman told the Los Angeles Times that the company paid $200 million on claims for those sorts of policies last year. He said the company has reviewed its cancellation policies in the past few years and added an internal independent review to “protect people’s rights in a fair and appropriate way,” according to the LAT.

The City Attorney, who last week launched a Web site focused on health insurance, is also opening a criminal investigation into Health Net’s practice of “paying employee bonuses based in part on canceling policies of people who have submitted substantial medical claims,” the LA Times said. The bonuses got the company into trouble with state regulators last year.

Blue Cross of California, which is owned by WellPoint, is appealing a $1 million fine for rescinding individual insurance policies. And last week, public criticism prompted the company to stop sending letters to doctors, asking them to identify omissions in patients’ health insurance applications.

The industry says it rescinding the policies of consumers who have misrepresented their health histories helps prevent health fraud.

February 19, 2008

California Bill Targets Health Insurance Cancellations

Spurred by complaints that Blue Cross of California and other health insurers cancel patients' policies after they get sick, a Southland lawmaker has introduced legislation that would require state regulators to sign off before carriers drop policyholders for allegedly failing to disclose preexisting medical conditions.

Assemblyman Hector De La Torre (D-South Gate) said his bill was prompted by recent letters from Blue Cross to physicians asking them about new patients' health issues that could be used as a reason for canceling coverage.

De La Torre said his bill was needed because insurance companies "were not intending to abide by the spirit" of a law he wrote last year prohibiting carriers from refusing to pay medical bills for previously authorized services.

"We all agree that if someone is lying and doing willful misrepresentation, then they should not be insured," the assemblyman said. "But the insurance companies should not be taking premium dollars from someone and dumping them."

Health insurance companies contend that weeding out people who may not have been forthright when they applied for coverage is an essential part of keeping treatment costs under control.

"We need to make sure that the process for application, rescission and cancellation is fair," said Christopher Ohman, chief executive of the California Assn. of Health Plans. "But we also want to make sure that the millions of people who do the right thing aren't left paying for the relatively few who don't."

Ohman said his group's members were "analyzing the implications" of De La Torre's bill.

The assemblyman's bill is the latest in a series of legislative, regulatory and legal actions in California in response to aggressive efforts by insurers and health maintenance organizations to drop patients who hold individual policies after they've filed claims.

The practice, known in the health insurance industry as rescission, has been the target of growing criticism from patients, physicians and healthcare reform advocates.

In recent weeks, the state Department of Insurance and Department of Managed Health Care levied $1.3 billion in penalties on Cypress-based PacifiCare for alleged improper claims handling and other violations.

Reviewing health insurers' proposed cancellations is an important safeguard, said Dr. Richard Frankenstein, president of the California Medical Assn. Companies should not be "the judge, jury and executioner," he said.

De La Torre's legislation and similar measures are needed in California as stopgap protections for patients at least until state or national policymakers, health insurers and dozens of other consumer and industry groups can agree on a health insurance plan that guarantees universal coverage, healthcare advocates say.

February 17, 2008

Living Without The California Health Insurance Industry

Blue Cross of California is sending physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose "material medical history," including "pre-existing pregnancies."

The letter wasn't going down well with physicians. "We're outraged that they are asking doctors to violate the sacred trust of patients to rat them out for medical information that patients would expect their doctors to handle with the utmost secrecy and confidentiality," said Dr. Richard Frankenstein, president of the California Medical Assn.

Blue Cross may or may not be within its rights to send out this letter, but they aren't doing anything either illegal or unusual. After all, any profit making insurance company is going to do its best to avoid covering people who are likely to incur large medical expenses. It's just the nature of the beast. If they don't do it, they'll go out of business.

So let's get rid of health insurance companies. They cherry pick clients, add huge administrative costs to the system, and do nothing to drive innovation or bring down costs. What good are they? Tyler Cowen answers:

Let me be clear: the incentives today are screwy. Let me also tell you my ideal world. Insurance companies are judged by honest third party intermediaries. Insurance companies compete like heck to make customers satisfied. Insurance companies monitor doctors, read Robin Hanson, and require evidence-based medicine. Insurance companies which fail at these pursuits either go bankrupt or they must abide by an ex ante contract to permit the exile of their CEOs to Greenland. Every year prices would fall in real terms, quality would improve, and coverage would be expanded. Imagine the whole health care sector working like laser eye surgery or cosmetic surgery.

I believe we know why insurance companies don't work this way, namely monitoring problems; they screw you over instead of serving you and they can get away with it. Go ahead, call me a pollyanna, but modern information technology and measurement can indeed resolve many monitoring problems. We can now monitor central bank performance quite well or show up in Sicily with a credit card and rent a car. Neither was the case forty years ago.

February 14, 2008

Heat is on California Health Insurers

With medical costs rising, record numbers of people losing their coverage and healthcare at the top of the domestic agenda, health insurers found themselves Wednesday in the cross-hairs of regulators, elected officials and law enforcement in California and across the nation.

New York Atty. Gen. Andrew Cuomo said the nation's largest health insurers have rigged rates they pay for physician visits, leaving patients with higher medical bills.

In Los Angeles, City Atty. Rocky Delgadillo has assembled a team of investigators and prosecutors to probe industry practices such as canceling patients' coverage after they get sick. Today he is set to unveil a first-of-its-kind website to solicit information about insurance cancellations and delays and denials of treatment.

The announcements follow a yearlong string of fines and citations against insurers in California. Just last month, amid widening state probes, state Insurance Commissioner Steve Poizner decided to seek as much as $1.3 billion in penalties from Cypress-based PacifiCare as a result of widespread claim problems.

"Our healthcare system is broken, and it's going to take a team effort to fix it," Delgadillo said. "Through our combined efforts, and the efforts of other prosecutors throughout this nation, we can make a real difference in stamping out fraud and abuse, and secure for American consumers the protection they deserve."

The crackdown echoes the frustration of consumers who revolted in the early 1990s against new health maintenance organizations, many of which sought to cut costs by rigidly regulating patients' freedom to choose doctors and limiting the medical care they would cover.

Insurers defend their business practices, saying one of their top goals is to keep health insurance affordable for all. In fact, they say, many of the practices in the spotlight actually are good examples of their value in holding down healthcare costs.

February 13, 2008

Southern California Hospital System Sues Kaiser Permanente

Prime Healthcare Services announced today that eight of its hospitals have filed lawsuits in four different Southern California counties against Kaiser Permanente seeking more than $25 Million for Kaiser's failure to properly pay thousands of claims for emergency medical services provided to Kaiser's HMO members. Under both federal and California law, each of these hospitals were required to provide medical screening examinations to each patient who sought emergency care and such further stabilizing care as was necessary to stabilize the patient's emergency medical condition regardless of the patient's insurance status. Kaiser, as well as other HMOs, is required to reimburse the hospitals for the reasonable and customary value of the emergency services provided. Although Prime Healthcare's hospitals provided emergency care to thousands of Kaiser's enrollees, Kaiser failed to properly reimburse Prime Healthcare's hospitals for the emergency services provided to its members. Instead, Kaiser has routinely denied claims in their entirety, paid only small portions of the claims, and/or reimbursed the hospitals at rates which are far below the reasonable and customary value of the emergency services. For example, Kaiser has failed to pay any portion of Sherman Oaks Hospital's $1.6 Million claim for emergency burn services provided to a critically-injured Kaiser member at the world-renowned Grossman Burn Center who was hospitalized for more than thirty days.

Given the rising costs of providing healthcare and the dramatic increase in the number of uninsured and underinsured patients, many hospitals have been forced to close, file bankruptcy, or limit services. Since 2001 more than 17 hospitals throughout Southern California have closed due to financial constraints and several others were forced to file bankruptcy. As noted by Roger Krissman, Chief Financial Officer of Prime Healthcare Services, "it is especially important that HMOs like Kaiser fairly and properly reimburse providers of emergency medical services because otherwise more hospitals may be forced to close". Mr. Krissman commented further that "Prime Healthcare had no choice but to file lawsuits against Kaiser in order to ensure continued access to healthcare for the members of the communities in which its hospitals are located."

In contrast to financially distressed hospitals, Kaiser reported profits of $1.3 Billion in 2006 and $2.5 Billion in 2007. This is not surprising given that although insurance premiums have increased; the amount of revenue spent on patient care has remained the same or decreased. Rather than spending the increased premiums on patient care, HMOs are using the money on increased layers of bureaucracy and middle management whose job it is to refuse necessary patient care, deny provider claims or find other ways to not pay provider claims properly. According to Dr. Prem Reddy, a board certified Cardiologist and Chairman of Prime Healthcare Services, "HMOs, including Kaiser, ought to be focused on effectively managing patients' care; but unfortunately, they are focused on managing bills". Also, in order to implement a process of working efficiently with Kaiser, Dr. Hassan Alkhouli, Medical Director of Prime Healthcare's Orange County Hospitals, attempted numerous times to arrange for a meeting with Kaiser's utilization managers to address utilization issues but his telephone calls went unanswered.
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February 12, 2008

The Defeat of the California Health Bill

The media has widely and falsely reported the California state senate's resounding defeat this week of a universal health care bill as a rejection of a bold plan for universal health care, and as a blow to efforts nationally. In fact, the defeat of this bill--which was cobbled together by Governor Schwarzenegger and the state assembly leader--should be read as a dramatic plea for universal health care. It is a victory for advocates of real reform.

One of the most progressive, heavily Democratic state legislatures in the nation has refused to support a bill that jerry-rigs a set of reforms into the current system and that fails entirely to achieve health care coverage that is adequate, secure, affordable--and universal. Since the leading Democratic presidential candidates are touting proposals that are similar in many respects, they should pay attention.

The California bill required residents to buy coverage and prohibited the insurance companies from rejecting applicants. It subsidized California's poorest residents, and required employers to subsidize coverage for employees. However, the bill declined to closely regulate the cost of premiums, size of deductibles, or extent of coverage. It did require insurers to spend 85% of premium income on health care--which sounded like an incentive for insurers to raise premiums. Tellingly, one of the most trumpeted features of the bill was the exemption from the requirement to buy insurance coverage if the cost of premiums exceeded 5% of a family's income.

In other words, this bill actually assured many people that they wouldn't need to buy health coverage because they wouldn't be able to afford the insurance premiums.

February 11, 2008

UnitedHealth faces stiff fines in California

At the end of 2007, UnitedHealth Group executives vowed to improve their operations and physician relations after saying the company lost 315,000 commercial members, mostly because it mishandled the 2005 acquisition of PacifiCare.

In late January, California insurance regulators offered their own numbers to measure how badly they believed United mishandled the PacifiCare deal.

Another number -- $1.3 billion -- is the maximum fine the California Dept. of Insurance could levy on the health plan. While analysts consider that amount unlikely, United still could face a hefty fine depending on how many of its apparent violations of state laws and regulations on paying medical claims are deemed "willful." Each "willful" violation is a maximum $10,000 fine, and each not considered intentional is a maximum $5,000.

Even if all are considered non-willful, then United could face as much as a $650 million fine -- about 50 times greater than any penalty the department has ever imposed, and a similar proportion greater than the $12 million paid last October in a 36-state settlement over payment practices.

That's because of one more number: 133,000. That is how many violations the insurance department said it uncovered, representing a period between June 23, 2006 and May 31, 2007. Meanwhile, the managed care department said 30% of the medical claims it reviewed were improperly denied. The insurance department regulates PPOs, while the managed care department regulates HMOs, and they conducted a joint, eight-month investigation into PacifiCare.

February 09, 2008

California Health Reform Bill: Unfairly Favored Insurance Companies

While the California health care reform bill "was touted as a fix to our broken health care system," it is "clear that this proposal was bad for consumers and unfairly favored insurance companies," state Sen. Leland Yee (D) writes in a San Francisco Chronicle opinion piece (Yee, San Francisco Chronicle, 2/5).

Yee continues, "This bill was not a step in the right direction, but a huge jump backward for working families who lack health care" because "it would have required consumers to buy their policies regardless of cost." Under the bill, "all Californians would have been required to buy insurance with no caps on premiums, no regulation of the costs of insurance or medical expenses, no maximum deductibles and no clearly defined minimum coverage," Yee writes. The bill also "would have provided incentives for employers who now provide benefits to cancel coverage in order to pay cheaper premiums or shift more costs to workers," according to Yee.

Yee writes that consumers "would have been forced to foot the bill so insurance companies could profit," adding, "Instead of pushing such a fatally flawed legislation, we should all be fighting to change our failing health care system without penalizing those who can least afford it" (San Francisco Chronicle, 2/5).

February 07, 2008

Before voting in the presidential primaries in 2008, it's important to know where the candidates stand on essential mental health care issues. Do they support mental health parity -- requiring mental illnesses to be covered by insurance the same way as physical conditions? What about people who can't afford insurance, or those who cannot get insurance because of being diagnosed with a mental illness?

We will be following the top candidates in each party for their positions on health care as it relates to those with mental illnesses. This page will be updated if the ranking of candidates change and/or when a candidate announces a new or changed policy.

The Florida Primaries held on January 29th shook up the political landscape of the election.The next morning, January 30th, Jon Edwards announced his withdraw from the campaign; Rudy Giuliani withdrew that evening. John McCain, who was previously considered an underdog in the Republican race, led the pack into Super Tuesday on February 5th.

The candidates views on health insurance can be a major issue in the race.The results of the 22 state primaries held on Super Tuesday were definitive on the Republican side of the house with John McCain the front runner by a sizable margin. Subsequently Mitt Romney suspended his campaign on February 7th. Then there were two. Mike Huckabee is now calling for previous Romney supporters to back his race. The Democratic primaries clearly indicated one result – the race between Hillary Clinton and Barak Obama will be a photo finish.

February 06, 2008

Some Calif. Health Plans Use Questionable Tactics

A group of insurance brokers in California contend that health plans in that state are employing questionable tactics to stifle the marketing of “wrap-around” health reimbursement arrangements (HRAs), and steer employers instead to more profitable products. But the health plans maintain that they are within their right to prevent outside firms from administering HRAs tied to their products.

Teresa A. St. Clair, a broker with Route Three Insurance and Financial Services, based in Paso Robles, Calif., suggests that some health carriers are trying to preserve profit margins by steering small groups toward high-deductible products that have higher premiums and no HRA option. “Carriers are dealing with the loss of premium by telling agents what plan the HRA can be paired with,” St. Clair says.

At issue are policies that restrict the availability of stand-alone HRAs sold independently of a carrier’s benefit plan, generally a high-deductible product. Interest in these wrap-around HRAs is growing as self-funded small groups seek ways to rein in premiums and health care costs, sources tell ICDC.

While most carriers market qualified high-deductible health plans (HDHPs) with HSAs, some of them restrict the use of HRAs to a limited number of products. Blue Cross of California, Health Net of California, Inc. and Kaiser Permanente require self-insured companies to sign a form acknowledging that the employer will not offer its employees a wrap-around HRA except as they are available with designated products.

Blue Cross of California markets one high-deductible product with an HRA, while Kaiser offers two HRA-based products and Health Net markets one HRA product.

February 04, 2008

Schwarzenegger’s Universal Healthcare Suffers Setback

On January 28, California Gov. Arnold Schwarzenegger lost a key vote on his way to being the second Republican governor to institute universal health coverage. The bill, ABX1 1, a joint effort between the Republican Schwarzenegger and the Democrat Assembly Speaker Fabian NÃºñez, died in the senate health committee on a vote of one to seven, with three abstentions.

The four Republican senators on the committee voted “no” because the bill represented a dramatic $14.9-billion expansion in the size of government, would have instituted the largest business tax in California history and would have added to California’s growing budget deficit. Committee vice-chair, Dr. Sam Aanestad (R.-Grass Valley), an oral surgeon, said, “Extracting billions of dollars in new taxes from employers will just drive many of them out of business. We can come up with a better plan.” The bill sought to impose a payroll tax on business, along with a hospital tax and a $1.75 hike in the cigarette tax. It also extended benefits and coverage to illegal immigrants.

Democrats cited two main concerns in opposing the bill. First, it looked financially unstable, threatening to add to California’s $14.5 billion deficit, thus jeopardizing existing welfare programs. Perhaps more importantly though was that it did not go far enough in their eyes. Sen. Sheila Kuehl (D.-Los Angeles) chairs the health committee. Sen. Kuehl authored SB 840, a state single-payer plan vetoed by the governor in 2006. Kuehl voted against the measure, citing among reasons a personal mandate similar to that imposed in Massachusetts, saying, “We can’t simply say to the people of California, ‘Go buy insurance.’”

February 03, 2008

Democrats push plans for affordable health insurance

Front-runners Hillary Clinton and Barack Obama, as well as former candidate John Edwards, who dropped out Wednesday,have put forth proposals to make health coverage more accessible and affordable.

Inspired by existing health reforms in Massachusetts, their proposals would prohibit insurers from rejecting individuals or charging them higher rates because of preexisting health conditions.

But forcing insurers to cover everyone won't necessarily solve the problem. States that have so-called guaranteed-issue laws, such as New York and New Jersey, have some of the highest health-insurance rates in the U.S. That means that healthy people in those states often decide not to buy coverage until they get sick, which further boosts costs for everyone.

Guaranteed issue could work if everyone were persuaded to buy coverage, spreading the risk among more people and pushing down prices. So Clinton, Edwards and Obama have each proposed a so-called mandate requiring individuals to be covered by insurance.

For example, Clinton and Edwards would require most employers either to provide coverage for their employees or to contribute to the cost. Clinton would exempt most small employers but offer them a tax credit as an incentive to provide coverage. Obama breaks with his opponents. He would require that all children have insurance but not all adults.

February 01, 2008

California Health's Hidden Costs on Campuses

College students, already absorbing tuition bills that are rising faster than inflation, are increasingly facing hundreds and sometimes thousands of dollars in extra and unexpected health insurance costs and medical bills.

The reason: Most campus health centers have not registered as "in network" for the biggest regional health insurers. That means students covered by their family's plan typically can't get reimbursed for many tests and procedures performed by campus health clinics.

In addition, a growing number of colleges are heavily promoting school-sponsored plans, which range in price from a few hundred dollars at Brigham Young University to as much as $2,500 a year at schools such as Brown University. While some plans are generous, others offer comparatively anemic coverage to the students but healthy profits to either the insurance company or the college. And increasingly, schools are automatically charging students for the campus plan unless they provide proof of other coverage each year. A few colleges are even requiring all students—including those who are already covered—to buy school-sponsored policies. Typically, students can't shop for better deals because the colleges approve only one plan.

The conflict adds up to big bucks, since young people generally spend $2,000 to $3,000 a year on health costs, creating a market worth billions.